The government borrowed a record amount in April, adding £62.1bn to the country’s budget deficit.
The Office for National Statistics said government borrowing was £51.1bn higher than the same month last year.
It comes amid efforts by Chancellor Rishi Sunak to prevent mass job losses from the coronavirus pandemic by furloughing many of the country’s workers.
The figure is significantly higher than expected, with most economists having predicted £30.7bn for the month.
Public debt jumped to almost 98% of GDP – the highest share of GDP by that measure since 1963, according to the ONS.
This was due to both higher borrowing and a lower estimate of the size of the economy.
Paul Craig, portfolio manager at Quilter Investors, said: “Government revenue is dominated by income tax and national insurance, so the furloughing scheme will help mitigate any serious damage here and now.
“However, the next biggest contributor is VAT, and this is where the worries will be for the Treasury. Consumption has collapsed and will take a considerable amount of time to return to levels seen prior to this crisis. All the work of the previous 10 years to balance the books has been undone in one fell swoop.
“However, the bottom line of all of this is that the amount of borrowing simply just isn’t important today or in the coming months.
“The amount of debt is not necessarily what matters, but the cost to service this debt. While debt to GDP ratios will climb, the ability to pay this down will also increase, particularly given the Bank of England and the Treasury have never been more aligned.
“So while gilts are being sold with negative yields, and the BoE being the most prominent buyer of this debt, the government will be fairly comfortable with the borrowing that is required currently.”
Alex Tuckett, senior economist at PwC, said the April borrowing figure was “dramatic”, adding that it was almost as much as the figure for the whole of the 2019/20 financial year.
“The dramatic deterioration in public finances was driven both by a more than 25% fall (relative to April 2019) in tax receipts as the economy contracted in response to the COVID-19 crisis, and an even more dramatic increase in expenditure (over 50% relative to April 2019), as the government has spent heavily on schemes such as the Coronavirus Job Retention Scheme.
“Large monthly borrowing figures will continue until the economy recovers and some aspects of fiscal support can be scaled back.”
Mr Sunak, said: “Our top priority is to support people, jobs and businesses through this crisis and ensure our economic recovery is as strong and as swift as possible. That’s why we’ve taken unprecedented steps to provide lifelines to people and businesses with our furlough scheme, grants, loans and tax cuts.
“If we hadn’t provided this support, more livelihoods would be at risk, and the economic and financial cost would have been much worse.”
